Tuesday, February 27, 2018

Gove goes for low hanging fruit

The briefing surrounding today's consultation paper on domestic agricultural policy has made it clear that direct payments will be reduced to bigger farms to free up money for other purposes. The paper sets out various ways in which this might be done which then form the basis of consultation questions. At this stage I don't want to get bogged down in the detail, but instead consider the principle.

There is no doubt this will be politically popular. Why should wealthy individuals be subsidised to farm? My sense is that most of the public have rather a sentimental view of agriculture made up of small farms. Another issue here is the vegan campaign run on social media in January. I think this was rather effective and has rattled livestock farmers who often failed to respond very effectively. But that is another story.

I also think that one of the issues here is that tax breaks encourage individuals to buy farms and farmland for tax avoidance reasons. This is a complex subject, as one does not want a tax structure that inhibits succession.

What is interesting is that the issue of competitiveness has dropped off the agenda to some extent. It appears in a form in debates over poor productivity, but they are not a central focus in the way that public goods are. Competitiveness is mentioned nine times in the document, for example in relation to the opportunities offered by new technology, and productivity forty times.

Large scale grain farmers in Northern France and Northern Germany will continue to receive CAP subsidies, albeit somewhat reduced because of the loss of the UK contribution. To over simplify, the international grain market is driven by supply and demand considerations, but price is clearly a factor. The UK needs to be very careful not to use pesticides prohibited in the EU or they may find their exports of grain blocked.

I think there is a better clarity/hierarchy of objectives in the Government's thinking that one found in the CAP. I am not against caps on subsidies. But I do think we need to be aware of the consequences.

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